Spies hunt AUKUS secrets, deliver $12.5bn hit to economy

ASIO chief Mike Burgess has revealed details of previously undisclosed spy cases and released an inaugural ‘cost of espionage’ report highlighting threats confronting governments, the private sector and high-value individuals.

ASIO director-general Mike Burgess at the Adelaide Convention Centre on Thursday. Picture: Matt Turner

You can now listen to The Australian's articles. Give us your feedback.

You can now listen to The Australian's articles.

Spy chief Mike Burgess has warned foreign agents are hunting AUKUS secrets amid “unprecedented” espionage activity that has delivered a one-year hit to the economy of more than $12.5bn.

In a major speech on Thursday night, Mr Burgess revealed details of previously undisclosed spy cases and released an inaugural “cost of espionage” report highlighting threats confronting governments, the private sector and high-value individuals targeted by nation states.

The report prepared by ASIO and the Australian Institute of Criminology, which was granted access to classified material and government departments, showed a conservative espionage cost to the economy of at least $12.5bn in 2023-24, with tens of billions of dollars in additional damage prevented by foiling spy plots.

As the US Defence Department conducts a review into the AUKUS nuclear submarine and military technologies pact, Mr Burgess used his Hawke Lecture in Adelaide to raise alarm over foreign intelligence services and agents seeking to potentially “compromise” the defence agreement.

In the speech, which outlines the industrial scale of foreign espionage and spy activity targeting Australians at home and abroad, the Australian Security Intelligence Organisation director-general said “you would be genuinely shocked by the number and names of countries trying to steal our secrets”.

“The obvious candidates are very active – Iʼve previously named China, Russia and Iran – but many other countries are also targeting anyone and anything that could give them a strategic or tactical advantage, including sensitive but unclassified information,” Mr Burgess said.

Mr Burgess – who warned espionage activity had surged to “unprecedented levels” eclipsing the Cold War era – said “we are seeing foreign intelligence services taking a very unhealthy interest in AUKUS and its associated capabilities”.

“With AUKUS, we are not just defending our sovereign capability. We are also defending critical capability shared by and with our partners,” he said.

The Australian last year revealed the Australian Federal Police had established a new AUKUS Command and was working closely with the Department of Defence and Australian Submarine Agency to shield nuclear submarine secrets and protect key personnel, technology and submariners.

As current and former Australian Defence Force and department personnel are targeted by foreign intelligence services using a range of espionage tradecraft, Mr Burgess said spies should expect to be arrested if they attempt to “compromise AUKUS”.

“Foreign intelligence services already consider Australia a difficult operating environment and I am determined ASIO will continue to play its part to make it even less hospitable. We will help defend AUKUS to ensure it is delivered without compromise.”

“The commonwealth government is also well attuned to the espionage challenge – not just in Defence but more broadly. It fully backs ASIO as Australiaʼs spy catcher.”

While violent extremism remains a top priority for ASIO after the national terrorism threat level was lifted last year to ‘probable’, which means a greater than 50 per cent chance of an onshore attack or terror plot, Mr Burgess said a “new iteration of great power competition is driving a relentless hunger for strategic advantage and an insatiable appetite for inside information”.

“Russia remains a persistent and aggressive espionage threat. Last year, two Russian-born Australian citizens were arrested and charged with an espionage-related offence.

“Separately, I can confirm in 2022 a number of undeclared Russian intelligence officers were removed from this country. The decision followed a lengthy ASIO investigation that found the Russians recruiting proxies and agents to obtain sensitive information, and employing sophisticated tradecraft to disguise their activities.

“But Russia is by no means the only country we have to deal with. Espionage can be small-scale and it can be industrial-scale. Spies can be opportunistic and spies can be patient, masquerading as diplomats, journalists, academics, business people and other professionals to conduct sophisticated, multi-year campaigns.”

Mr Burgess revealed ASIO had “detected and disrupted countless examples of all these things: 24 major espionage and foreign interference disruptions in the last three years alone – more than the previous eight years combined … and they are just the major disruptions; there have been many other cases”.

He said spies had recruited a security clearance holder who handed over official documents on free trade negotiations, foreign companies linked to intelligence services had sought to buy land near sensitive military sites, and revealed a state bureaucrat obtained names and addresses of designated “dissidents” from a database.

Nation-state hackers compromised the network of a peak industry body stealing sensitive information about exports and foreign investment and hacked into the systems of a law firm involved in sensitive government-related litigation.

A foreign intelligence service also directed multiple agents and their family members to “apply for Australian government jobs – including with the national security community – to get access to classified information”. A visiting academic also broke into a restricted technology laboratory and filmed its contents.

“Nation states are spying at unprecedented levels, with unprecedented sophistication. ASIO is seeing more Australians targeted – more aggressively – than ever before.”

Mr Burgess, who was appointed ASIO director-general by the Morrison government in 2019 and had his term extended last year by the Albanese government until September 2029, issued a grim outlook on rising espionage threat levels.

“We need to understand espionage is not some quaint, romantic fiction; it’s a real, present and costly danger. Espionage remains one of Australiaʼs principal security concerns.

“Iʼm still not sure we, as a nation, truly understand the damage espionage inflicts on our security, democracy, sovereignty, economy and social fabric.”

Mr Burgess listed examples where Australian businesses and individuals were targeted.

“Several years ago, a delegation from overseas visited a sensitive Australian horticultural facility. During an official tour of the site, a member of the delegation broke away, entered a restricted area and photographed a rare and valuable variety of fruit tree.

“An alert staff member discovered and deleted the images but it later emerged photos weren’t the only things taken that day – several of the treeʼs branches were missing. The delegate had snapped them off and smuggled them out of Australia.

“Almost certainly, the stolen plant material allowed scientists in the other country to reverse engineer and replicate two decades of Australian research and development.”

Mr Burgess said the cost of espionage report estimates “foreign cyber spies stole nearly $2bn of trade secrets and intellectual property from Australian companies and businesses in 23-24”.

“The scenarios the Institute modelled as foreseeable acts of espionage are eye-opening and eye-watering: the theft of trade secrets from a large publicly listed company could wipe $900m dollars from its share price, with the figure compounding five-fold if there was another compromise within one year.

“A cyberespionage attack on a similar sized company could result in half a billion dollars in share market losses. The espionage-enabled sabotage of critical infrastructure could cost the economy more than $1bn … with the figure ballooning to $6bn if the disruption lasted just one week.”

To gain strategic and tactical advantage, foreign agents are using a myriad of spy methods to access sensitive or unclassified information. Mr Burgess listed seven core reasons why foreign intelligence services are targeting Australia, including wanting to “covertly comprehend Australiaʼs political decision-making and policy priorities, including our alliances and partnerships – particularly AUKUS” and “steal Australiaʼs intellectual property and cutting-edge research”.

They are seeking to recruit elected officials, public servants, military, industry and academic leaders to “their own cause”, obtain personal details of individuals with access to sensitive information so they can be targeted for potential recruitment and target perceived critics of regimes so they can be monitored.

Amid speculation Chinese warships that circumnavigated Australia and conducted live-fire exercises in the Tasman Sea ahead of the election were mapping potential targets, Mr Burgess said foreign spies were mapping out “Australian critical infrastructure for potential sabotage if regional tensions boil over” and acting to “undermine Australiaʼs military modernisation and identify vulnerabilities in our defence capabilities”.

He revealed a trade official recently told ASIO “there’s no way the Chinese intelligence services would have any interest in his organisation’s people and premises in China”.

Mr Burgess also warned that foreign intelligence services are broadening their activity to aggressively target advanced technology with civilian and military applications, public and private projects, negotiations and investments that “might give foreign companies a commercial advantage” and Antarctic research, green technology, critical minerals, and rare earths extraction and processing.